Morning traders. Thanks Trees and after-market regulars. Market...

Morning traders. Thanks Trees and after-market regulars.

Market wrap:

Shares look set for a strong open after Wall Street rebounded on merger activity and optimism that China's central bank will support its economy.

The June SPI 200 futures contract surged 49 points or 0.8% to 5900 after People's Bank of China Governor Zhou Xiaochuan said China had "more room" for quantitative easing if the economy continues to slow.

The S&P 500 rallied 25 points or 1.22% with all 10 industry groups in the ascendant following the index's worst week since January. The Dow put on 263 points or 1.49% and the Nasdaq 56 points or 1.14%.

“Investors had been worried about China’s slowing growth, so encouraging comments from their central bank lifted markets. And merger news also contributed to the sudden rush into stocks,” Kate Warne, investment strategist at Edward Jones in the US, told MarketWatch. “Stock markets tend to over-react to good and bad news. While it is positive that markets have once again showed resiliency and bounced back, I am not sure a 200+ gain on the Dow is warranted.”

China's benchmark share index, the Shanghai Composite, yesterday jumped 2.6% to a seven-year high after Zhou Xiaochuan said Chinese growth had slowed too much and hinted that further stimulus measures were likely. Read more here. Helping sentiment was the announcement of an ambitious Chinese plan to improve trade with Africa and Eurasia with a 'New Silk Road' initiative.

Take-over activity in the US health sector soothed fears over extended valuations. Dow component UnitedHealth agreed to buy pharmacy benefit firm Catamaran Corporation in a deal worth almost US$13 billion. The Nasdaq Biotechnology Index rose 1.1% after Horizon Pharma swooped on rival Hyperion Therapeutics.

House-builders rallied after pending home sales increased to their strongest level in more than two years last month. Other economic data was mixed. Consumer spending rose a tepid 0.1% in February, confirming a likely slowdown in US growth after a 0.2% contraction in January. Incomes increased by 0.4%.

BHP and Rio Tinto shrugged off a new seven-year low in iron ore. BHP advanced 0.17% and Rio Tinto 1.17% in US trade. Spot iron ore for import to China yesterday slumped $1.70 to US$52.90 a dry tonne.

The energy sector was among the best of the US sectors despite a second straight decline in the price of crude. Energy stocks rallied 2.15%. West Texas Intermediate crude oil for delivery in May settled 19 cents or 0.4% lower at US$48.68 a barrel as a deadline neared for a deal over Iran's nuclear aspirations. Any agreement could include an easing of sanctions on Iranian oil exports, adding to a global oversupply.

Nickel sagged to its lowest price in almost six years after inventories rose to record levels. Read more here. In London, nickel dived 3.1% and tin 0.9%. Copper rallied 0.5%, aluminium 0.9% and zinc 1.3%. Lead closed flat. US copper for May delivery was recently up 0.5% at US$2.78 a pound.

Gold stocks retreated 2.35% as a resumption of the rally in the US dollar dulled demand for alternative stores of wealth. Gold for April delivery settled $15 or 1.3% lower at US$1,184.80 an ounce. The Australian dollar was this morning down more than a cent at 76.43 US cents.

European stocks took their cues from China and a surge in economic confidence to a three-and-a-half-year high. The Stoxx Europe 600 added 1.09% as Germany's DAX gained 1.83%, France's CAC 0.99% and Britain's FTSE 0.52%.

TRADING THEMES TODAY

REBOUND: It's a funny old game. On the weekend, China's central bank chief vowed to support the economy. Trading resumes on Monday and Australia ignores the 'news'. China rallies, Europe rallies, the US rallies. Now Australia has no choice but to follow suit because it is so obviously out of sync with its peers. Trading here yesterday was likely dominated by institutional end-of-quarter portfolio shuffling, which tends to climax the day before the last trading day of the relevant month. That said, there may be a few substantial swings in both directions at the big end of the market in the closing auctions tonight as the instos massage their figures. These aberrations tend to unwind quickly next session once the jobs is done and bonuses secured. What with the end of the quarter and the short week for Easter, this might be the least predictable trading week of the year.

ECONOMIC NEWS: Home sales are due at 11am EST, followed by private sector credit at 11.30am. Consumer confidence is tonight's main event in the US. Also due: Chicago PMI, house price index and speeches by two Fed officials.

Good luck to all.